Passive incomes are great and viable options for just about anyone. While they do require an initial investment, monetary or time, with the right dedication and a bit of patience you can start seeing a real profit. There is also an array of side hustle opportunities, making it easier than you think to find one that fits your interests and skills.
So what different types of passive income opportunities exist and how much does it take to invest in them initially? Here are some tips to get you started.
Passive Income in an Online World
The potential hurdle that many face when wanting to start up a passive income opportunity is the upfront cost of investment. When it comes to more traditional ideas of passive income, people tend to think of real estate options like owning rentals or Airbnbs.
While they are certainly worthwhile options to generate passive income for years, many simply don’t have the kind of savings needed to make such a large investment. Luckily, we live in a digital age and there is now a whole other world of possibilities for the passive income market.
In place of a large monetary investment, setting up passive income in the digital space lets you utilize some of your unique skills and time to create a product that will gain you some extra passive income.
With a wider market available thanks to the connectivity of the Internet, there are plenty of gaps in the market that are just waiting for the right person to fill in.
There’s an App for That
One of the more common ways to start earning passive income is to create a digital app. However, when getting started on developing a successful app, it’s important to put your investments into the right areas. According to MLSDev, some of the key factors that can help you determine the costs of building an app include:
- Vendor type and location
- Complexity and the number of app features
- Back-end infrastructure and connected APIs
- Complexity of UX/UI design
- Inclusion of additional branded visual elements
- Development approach (native, mobile web, hybrid, etc)
- Number of platforms to be developed (iOS, Android, web, etc)
A simple app can cost between $5,000 to $10,000 to create, but it’s likely you’ll spend more on development depending on the app’s needs to function correctly and efficiently. Creating something that has longevity will warrant a better return on investment so it’s also worth testing your app prior to launch.
Canary Testing is a great pre-launch option, especially if your software relies heavily on being user-friendly. Optimizely tells us that “Canary testing allows new code or features to be released to a small subset of users to verify if there are any issues with the code before releasing to a larger audience.
By limiting the release to a select audience to minimize the blast radius of new releases, teams are able to validate functionality and performance prior to rolling out to all users.” While testing is an additional cost, it will likely save you from an expensive or even detrimental problem in the future.
Additionally, when your app is live, the first impression is often make-or-break for future success. If it has a rocky launch you could potentially lose a lot of customers and thus, money.
While the digital economy is a great option for earning a passive income, it should be noted that it’s imperative you also understand the legal landscape, or at the very least, be aware of the tax requirements of your digital business.
You’ll need to read up and stay knowledgeable on not only the taxation rules in your home country but the countries that your customers reside in. Nothing cuts into your passive income profits like a tax hiccup.
Utilize Your Creativity
Beyond app creating, there is an array of digital options, ones that might be better suited for you if you’re not the most tech-savvy person. If you’re a creative type, the design market can be a profitable venture. For example, designing a logo is a great form of passive income and opens up a lot of opportunities to work with companies both big and small. It can also serve to build brand authority for your other assets.
Of course, just like any line of work, you’ll need to invest in the right tools for your design business.
Both Adobe Illustrator and Adobe Photoshop are crucial for digital design whether designing a logo for an app or the cover of an ebook. Moreover, in order to refine your skills and spend less time trying to figure out the programs, watching how-to videos online can be a great resource.
You might also contact your local community center and see what classes they offer in regards to digital designing as well as tricks of the trade.
Similar to app building, testing out your skills in a low stakes situation can yield a better business in the future.
Consider designing a logo for a family member’s small business at a low price. You could also offer to design business cards for your spouse or friend. Not only will you learn how to take in requests and feedback but you’ll also learn how long a project might take, giving yourself a better idea of what projects you’re equipped to handle.
Remember, the goal is to create something that will generate income for years to come without too much ongoing labor on your part.
Starting up a way to earn passive income takes dedication and patience, but it’s worth it. Furthermore, it presents a great opportunity to marry your interests and special skills with a long-term profit. You don’t have to dedicate your whole life to your side hustle either, go at the pace that’s right for you and try to enjoy the process of learning something new, while also cashing in.
Dan Matthews is a freelance writer with a penchant for financial wisdom and solid research. You can find him on Twitter @danielmatthews0 and LinkedIn.
Josh founded Money Buffalo in 2015 to help people get out of debt and make smart financial decisions. He is currently a full-time personal finance writer with work featured in Forbes Advisor, Fox Business, and Credible.